Blueprint






Exhibit 10.1






SECOND
AMENDMENT TO EMPLOYMENT AGREEMENT


 


This
SECOND AMENDMENT (this “Second
Amendment”) to that certain EMPLOYMENT AGREEMENT (the
“Agreement”)
by and among Robert C. Hatley (the “Executive”),
Paragon Commercial Corporation, a North Carolina corporation (the
“Corporation”),
and Paragon Commercial Bank, a North Carolina-chartered bank and
wholly owned subsidiary of the Corporation (the “Bank”),
is entered into and effective as of December 29, 2016. All
capitalized terms not otherwise defined herein shall have the
respective meanings set forth in the Agreement.


 


WHEREAS, the Executive, the Corporation
and the Bank entered into the Agreement, and the Agreement became
effective, on the 1st day of September, 2013;


 


WHEREAS, Section 8.8 of the Agreement
provides that the Agreement may be amended pursuant to an
instrument in writing signed by each of the parties to the
Agreement; and


 


WHEREAS, the Executive, the Corporation
and the Bank entered into a First Amendment to Employment Agreement
(the “First
Amendment”), amending the Agreement effective as of
October 27, 2015;


 


WHEREAS, pursuant to Section 1.3 of the
Agreement, Executive has not been given thirty (30) days’
prior written notice of non-renewal, and therefore, at the end of
the initial term, ending December 31, 2016, the term of the
Agreement shall automatically be extended for an additional twelve
(12) months until December 31, 2017; and


 


WHEREAS, the Boards of Directors of the
Corporation and the Bank have assessed the advantages, and any
potential disadvantages, of this Second Amendment to the Bank, the
Corporation and the Corporation’s shareholders and believe
that the Second Amendment is in the best interests of the Bank, the
Corporation and the Corporation’s shareholders;
and


 


WHEREAS, as of the date of this Second
Amendment, none of the conditions or events included in the
definition of the term “golden parachute payment” that
is set forth in section 18(k)(4)(A)(ii) of the Federal Deposit
Insurance Act [12 U.S.C. 1828(k)(4)(A)(ii)] and in Federal Deposit
Insurance Corporation Rule 359.1(f)(l)(ii) [12 CFR 359.1(f)(l)(ii)]
exists or, to the best knowledge of the Employer, is contemplated
insofar as the Employer or any affiliates are
concerned.


 


NOW THEREFORE, in consideration of these
premises, the Corporation, the Bank and the Executive hereby agree
that the Agreement, as amended by the First Amendment, shall be
further amended by this Second Amendment as follows:


 


A.           Article
6 of the Agreement, as amended by the First Amendment, shall be
amended, superseded and replaced in its entirety as
follows:


 


ARTICLE
6


 


CHANGE
IN CONTROL BENEFITS


 


6.1 Change in Control Termination
Benefits.


 


(a)
Change in Control. If a
Change in Control occurs while this Agreement is in effect, the
Executive shall be entitled to the lump sum payment specified in
paragraph (b) below.   


 



             

(b) Lump Sum Payment: The Employer shall
make or cause to be made a lump-sum payment to the Executive in an
amount in cash equal to 2.99 times the Executive’s annual
compensation.  For this purpose, “annual
compensation” means (1) the Executive’s annual
Base Salary when the Change in Control occurs, plus (2) any bonuses
or incentive compensation earned for the calendar year ended
immediately before the year in which the Change in Control
occurred, regardless of when the bonus or incentive compensation
earned for the preceding calendar year is paid and regardless of
whether all or part of the bonus or incentive compensation is
subject to elective deferral.  The amount payable to the
Executive hereunder shall not be reduced to account for the time
value of money or discounted to present value. The payment required
under this paragraph (b) shall be paid to Executive in a single
lump sum immediately upon the consummation of the Change in Control
transaction.






 



 

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(c)
Other Benefits: In addition
to life and medical insurance benefits under Section 4.5 of this
Agreement and any benefits to which the Executive may be entitled
under any Salary Continuation Agreement in effect between the
Executive and the Employer during the term of this Agreement, upon
a Change in Control, the Employer shall contribute or cause to be
contributed to the Executive’s 401(k) plan account the
matching and profit-sharing contributions, if any, that would have
been made had the Change in Control not occurred before the end of
the plan year.


 


6.2 Definition of Change in Control. For
purposes of this Agreement, “Change in
Control” means any of the following
events:


 


(i)           After
the effective date of this Agreement, any “person” (as
such term is defined in Section 7(j)(8)(A) of the Change in Bank
Control Act of 1978), directly or indirectly, acquires beneficial
ownership of voting stock, or acquires irrevocable proxies or any
combination of voting stock and irrevocable proxies, representing
fifty percent (50%) or more of any class of voting securities of
the Corporation or the Bank, or acquires control of in any manner
the election of a majority of the directors of the Corporation or
the Bank;


 


(ii)           The
Corporation or the Bank consolidates or merges with or into another
corporation, association, or entity, or is otherwise reorganized,
where it is not the surviving corporation in such transaction;
or


 


(iii)           All
or substantially all of the assets of the Corporation or the Bank
are sold or otherwise transferred to or are acquired by any other
corporation, association, or other person, entity, or
group.


 


Notwithstanding the
foregoing, a Change in Control shall not include (x) any transaction to which Executive
consents in a writing specifically noting this provision of this
Agreement, or (y) any
transaction or series of transactions associated with the election
by the Corporation to be taxed as a Subchapter S corporation under
the Internal Revenue Code of 1986.


 


6.3 No Multiple Severance Payments. If
the Executive receives payment under Article 6 he shall not be
entitled to any additional severance benefits under Section 4.4 of
this Agreement.


 


6.4 Compliance with Section 409A of the
Internal Revenue Code.  The Corporation, the Bank
and Executive hereby acknowledge and agree that all benefits or
payments provided by the Employer to the Executive pursuant to this
Agreement are intended either to be exempt from Section 409A of the
Internal Revenue Code and official guidance thereunder
(“Section
409A”), or to be in compliance with Section 409A, and
the Agreement shall be interpreted to the greatest extent possible
to be so exempt or in compliance.  If there is an ambiguity in
the language of the Agreement, or if Section 409A guidance
indicates that a change to the Agreement is required or desirable
to achieve exemption or compliance with Section 409A, the
Corporation, the Bank, and the Executive agree to attempt to
renegotiate in good faith to clarify the ambiguity or make such
change.


 


If any
severance or other payments that are required by the Agreement are
to be paid in a series of installment payments, each individual
payment in the series shall be considered a separate payment for
purposes of Section 409A.


 


If at
the time of the Change in Control (a) any stock of the Corporation
is publicly traded on an established securities market or
otherwise, and (b) Executive is a “specified employee”
within the meaning of Section 409A, no payment, compensation or
other benefit payable or  provided to the Executive in
connection with the Change in Control that is determined, in whole
or in part, to constitute “nonqualified deferred
compensation” within the meaning of Section 409A shall be
paid or provided to Executive before the earlier of (i)
Executive’s death or (ii) the day that is six (6) months plus
one (1) day after the Change in Control date (the
“New Payment
Date”).  The aggregate of any payments that
otherwise would have been paid to the Executive during the period
between the Change in Control date and the New Payment Date shall
be paid to the  Executive in a lump sum on such New Payment
Date.  Thereafter, any payments that remain outstanding as of
the day immediately following the New Payment Date shall be paid
without delay over the time period originally scheduled, in
accordance with the terms of this Agreement. 


 



 

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6.5 Survival.  The parties
hereto specifically agree that the agreements contained in this
Article 6 shall survive the termination of this
Agreement.


 


 



             

B.            

Except
as expressly amended by this Second Amendment, the provisions of
the Agreement, as amended by the First Amendment, shall remain in
full force and effect, in their entirety, in accordance with their
terms.






 


 


IN
WITNESS WHEREOF, the parties have executed this Second Amendment to
the Agreement as of the date first written above.


 


	

 PARAGON
COMMERCIAL BANK

	
 

	
 

	


PARAGON COMMERCIAL CORPORATION

	
 


	
 

	
 

	
 

	
 

	
 


	

By: /s/
Howard Jung

	
 

	
 

	

By: /s/
Howard Jung

	
 


	

Title:
Chairman

	
 

	
 

	

Title:
Chairman

	
 







 


	


EXECUTIVE

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 


	

By: /s/
Robert C. Hatley

	
 

	
 

	
 

	
 


	

Robert
C. Hatley

	
 

	
 

	
 

	
 


	
 

	
 

	
 

	
 

	
 







 


 


 


 


 


 




 

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